The name of vaunted British economist John Maynard Keynes has been invoked so much in recent months—as hero and whipping boy—you'd think he was a member of President Obama's economic team. In a way, he is, even though he's been dead for 62 years. With the economy in ruins, his ideas are back in vogue. But if all you know about Keynes is his name (which, for starters, rhymes with "brains"), here's a cheat sheet on the man so you can sound smart at cocktail parties.
1. He believed big government is good government.
Keynes believed that the state, not the private sector, should drive economic policy. Though President Franklin Roosevelt's New Deal is often discussed now as the ultimate example of Keynesian economics in action, FDR didn't fully embrace it until the late 1930s, when he boosted deficit spending during the run-up to World War II. It worked, and Keynesianism reigned in the U.S. until the 1960s.
2. He urged zigging when everyone else zags.
Countercyclical fiscal policies keep economies on an even keel, he believed. When the economy cools off, heat it up by cutting interest rates and spending lots of government dough, particularly on infrastructure, education and public health. Sound familiar? At a combined $1.5 trillion—all borrowed money—the TARP and stimulus package are pure Keynes. In good times? Raise taxes and cut spending to keep inflation in check.
3. He believed that markets fail when left to their own devices.
The crash of 1929, as well as the current one, would seem to buoy his instincts for government regulation and intervention. He learned the hard way, though: like many others, he lost a fortune on Black Tuesday, then gradually made it back.
4. For an economist, he ran with a cool crowd.
The Bloomsbury Group, his London social clique, included Virginia Woolf and E. M. Forster. Picasso was also a pal.
5. His lifestyle was also ahead of its time.
Keynes was openly gay in young adulthood near the turn of the century, enjoying public love affairs with male writers and artists before marrying a Russian ballerina in 1925, when he was 42.